HM Treasury written question – answered at on 11 January 2018.
David Linden
SNP Whip
To ask Mr Chancellor of the exchequer, what recent discussions he has had with the Markets and Competition Authority on the introduction of a cap on overdraft charges for personal current accounts; and if he will make a statement.
David Linden
SNP Whip
To ask Mr Chancellor of the exchequer, what steps the Government is taking to encourage banks to impose the voluntary cap on overdraft charges for personal current accounts recommended by the Competition and Markets Authority in 2016; and what assessment his Department has made of the effectiveness of that cap on reducing repayments by customers where it has been imposed.
John Glen
Minister of State (Treasury) (City), The Economic Secretary to the Treasury
Treasury Ministers and officials meet regularly with colleagues across Government, and the various regulators, to discuss a wide range of issues. As was the case with previous Administrations, it is not the Treasury's practice to provide details of all such discussions.
As part of the final report on its retail banking market investigation, published in 2016, the Competition and Markets Authority (CMA) imposed a series of remedies in relation to overdrafts, including a legal requirement on banks to set a monthly maximum charge for unarranged overdraft charges. Most banks have been required to do this since August 2017. The CMA will monitor compliance with its Order. As recommended by the CMA, the Financial Conduct Authority (FCA) is reviewing the effectiveness of the monthly maximum charge for unarranged overdrafts.
Following the CMA’s investigation, the FCA also committed to look in more detail at both arranged and unarranged overdrafts as part of its broader review into the High Cost Credit sector. The FCA published a Feedback Statement on its review of high-cost credit in July 2017, which concluded that it had concerns about both arranged and unarranged overdrafts.
The FCA will investigate these concerns further, and where Intervention is needed and justified, aim to bring forward proposals in Spring 2018 concerning both overdrafts and other forms of high-cost credit. The FCA’s review of the effectiveness of the monthly maximum charge for unarranged overdraft charges will inform the FCA’s proposals on overdrafts.
The Government supports the FCA’s work in this area and will continue to work with it to ensure that all consumers who use high-cost credit products are treated fairly.
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